Remarks by IMF Managing Director Kristalina Georgieva During an Extraordinary G20 Leaders’ Summit
IMF News, March 26, 2020
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- Published: March 26, 2020
Global outlook and uncertainties
- The IMF projects "a contraction of global output in 2020, and recovery in 2021."
- "How deep the contraction and how fast the recovery depends on the speed of containment of the pandemic and on how strong and coordinated our monetary and fiscal policy actions are."
Immediate policy priorities and rationale
- Targeted fiscal support is "particularly critical" to:
- Support vulnerable households so they can "stay afloat and get quickly back to work."
- Support large and small businesses to prevent widespread bankruptcies and layoffs.
- Rationale: Without timely support "it will take years to overcome the effects of widespread bankruptcies and layoffs."
- Benefits of timely support:
- "Accelerate the eventual recovery"
- Improve capacity to tackle "debt overhangs and disrupted trade flows."
Challenges facing emerging market and developing economies
- Emerging market and developing economies face a combination of shocks:
- Health crisis
- Sudden stop of the world economy
- Capital flight to safety
- For some, "sharp drop in commodity prices"
- Specific challenges highlighted:
- "Exceptionally large number of countries simultaneously require IMF emergency financing."
- "Emerging markets are dramatically impacted by record high capital outflows and severe shortage of FX liquidity"
- "Many low income countries step into this crisis under a high burden of debt."
- Financial capacity offered: "We have a considerable, $1 trillion strong, financial capacity to place in their defense, working closely with the World Bank and other International Financial Institutions (IFIs)."
IMF requests and proposed actions
- The IMF asks G20 backing to:
- "Double our emergency financing capacity."
- "Boost global liquidity through a sizeable SDR (Special Drawing Right) allocation, as we successfully did during the 2009 global crisis and by expanding the use of swap type facilities at the Fund"
- "Support action of official bilateral creditors to ease the debt burden of our poorest members during the times of global downturn."
Closing message
- "We will get through this crisis together. Together we will lay the ground for a faster and stronger recovery."
- Acknowledgement: Gratitude to "the Saudi presidency for calling this extraordinary summit" so leaders "can close ranks as a global community to protect people’s lives and guard the world economy."
Source: Remarks by IMF Managing Director Kristalina Georgieva, Press Release No. 20/108, March 26, 2020.